Flipkart will pay $85.2 per unit for employee stocks

Existing employees have reportedly been allowed to sell 25% of their vested options, while former employees have been allowed to sell 10%.Varsha Bansal&Mugdha Variyar | ET Bureau | Updated: October 04, 2017, 09:04 IST

India's largest online retailer Flipkart has communicated to its existing and former employees that the repurchase of stock options would be done at $85.2 per unit with an additional transaction fee of $3-4 per unit, according to an email sent by the company.

This means that each employee would get roughly Rs 5,300 per unit (as per Tuesday's currency rates). Existing employees have been allowed to sell 25% of their vested options while former employees have been allowed to sell 10%, according to three employees ET spoke to.

“Flipkart is among the few companies that have given this opportunity, not once but four times in the past five years. It's only because as an organisation, Flipkart's culture is steeped in transparency and fairness - the first step of which is to ensure employees are rewarded for their dedication and hard work. Without you, Flipkart couldn't have become the flagbearer of Indian e-commerce,“ Flipkart Group CEO Binny Bansal said in an email to employees.

“The employees received an email from Binny (Bansal) on Monday night that they could sell some of the vested Esops back to the company,“ said a person familiar with this development. “The following day (Tuesday) an email was sent by the HR manager that an employee can sell up to 25% of their vested Esops.“

This share buyback plan marks the largest such programme till date in the Indian startup sector and offers stakeholders the biggest opportunity so far, to liquidate their holdings in the country's most valuable startup.

ET had reported on Tuesday that the board of Flipkart had approved a plan to repurchase employee stock options, potentially benefiting close to 6,000 current and former employees. The repurchase programme will include employees of subsidiaries like online fashion retailer Myntra and payments unit PhonePe. The corpus set aside for this programme is over $100 million. Flipkart did not reply to queries from ET.

The repurchase development comes after Flipkart successfully raised about $4 billion in financing this year from investors such as Japan's SoftBank Corporation and Chinese internet conglomerate Tencent. However, things flipped for Flipkart as it underwent a tough time during 2016 due to a funding winter and it also went through multiple management changes.

In April, the company announced a new round of funding which saw its valuation drop by about a third to $11.6 billion compared with $15.2 billion in 2015. But, the Bengaluru-headquartered company said in April it will issue additional “differential ESOPs“ to current employees to make up for the loss due to the fall in valuation of the company.